Fiat Chrysler's new boss, Mike Manley, faces the task of executing his predecessor's plan to ramp up production of SUVs and catch up on electric cars to keep the world's seventh-largest carmaker competitive in the absence of a merger. Jeep division head Manley was named on Saturday to succeed longtime Chief Executive Sergio Marchionne, one of the auto industry's most tenacious and respected auto chiefs, who fell seriously ill after suffering complications following surgery. Marchionne was already due to step down next April, but shares are likely to react to the news of his health crisis on Monday. The stock closed at 16.42 euros on Friday. Fiat Chrysler Automobiles NV (FCA) said British-born Manley would pursue the strategy that Marchionne outlined last month.
FCA has pledged to increase production of sport utility vehicles and invest in electric and hybrid cars to double operating profit by 2022. It also unveiled bold targets for Jeep, which has become FCA's ticket to creating a high-margin brand with global appeal. Analysts said that choosing the 54-year-old Manley, under whose watch Jeep's sales surged fourfold, sent a clear message that FCA was staying on course and would keep the Jeep brand at the heart of its growth plan.
"Manley knows that his primary focus is on execution and that, already, he has a strategy into which his team has bought," said George Galliers, an analyst at Evercore ISI. "There is no reason the 2022 plan cannot be executed." Under Manley, the company is expected to sharpen its focus on revamping individual brands, including ailing Fiat in Europe, Chrysler in the United States and Alfa Romeo, which has yet to turn a profit despite multibillion-euro investments. Marchionne, widely credited with rescuing both Fiat and Chrysler from the brink of bankruptcy, had focused on fixing FCA's finances first, notably erasing all debt.
Fiat Chrysler Automobiles CEO Sergio Marchionne leaves at the end of a news conference in Balocco, northern Italy, June 1, 2018. (Image: Reuters)
He was a gift to investors, including Italy's Agnelli family, through 14 years of canny dealmaking, growing Fiat's value 11 times, helped by spinoffs of tractor maker CNH Industrial NV and Ferrari NV. The Agnellis still have a controlling interest in all three companies. But his track record at fixing some of FCA's brands was mixed, with investments and product launches repeatedly delayed. Profitability in Europe is only gradually recovering, FCA has yet to make significant inroads in China, and the company relies on North America for three-fourths of profits just as that market is expected to come off its peaks.
Recently, Fiat Chrysler experienced a protest at its Melfi plant in Italy due to the huge sums of money spent by Italy's Juventus soccer club to sign up Cristiano Ronaldo. Exor, the investment holding of Italy's Agnelli family, owns nearly 30 percent of Fiat Chrysler (FCA) and 64 percent of Juventus. However, FCA and Juventus are completely separate entities, each managing their own finances and operations.
'RIGHT MAN'
"FCA needs to fix the volume brands before it's too late and make them appealing again. ... Manley is the right man for that job," said Felipe Munoz, an automotive analyst at JATO. Marchionne had advocated industry mergers to share the cost of building electric, hybrid and self-driving cars, but gave up the quest when his preferred target, General Motors Co, rejected his advances. FCA said on Saturday that Manley would execute the new strategy to ensure a "strong and independent" future for the group. But without a partner in sight, Manley needs to show FCA can keep churning out profits on its own, even as emissions rules tighten, SUV competition intensifies and worries over potential U.S. emissions fines abound.
While FCA had a succession plan, the future appears less clear at Ferrari, the luxury brand that Marchionne was due to lead until 2021. Ferrari announced some midterm targets earlier this year - pledging to double core earnings and churn out hybrids and an SUV - but a detailed strategy was due in September. Marchionne made some bold choices in recent years, notably raising production, but was always careful to not dilute the brand's exclusivity. Analysts questioned whether new CEO Louis Camilleri would be able to do the same and grow Ferrari beyond what it is today while keeping dealers, racing fans, owners and collectors on board. "(Ferrari) will always be like a fine race car. Marchionne increasingly had it tuned to perfection," Galliers said. "It has to be seen if it can remain so without him."
Comments
0 comment